
Cost control is indivisible from operational risk management 341
16.5 Why fat executive options work against shareholder value
In the aftermath of the various scandals surrounding overblown executive options,
legal experts suggested that this has become a case study in the mismanagement of
morality – an operational risk. According to some estimates, in 2002 alone corporate
scandals, options being one of them, have cost investors a cool $200 billion.
5
Among
the hardest hit investors were the pension funds.
In his book Take On The Street Arthur Levitt, Jr says that when he became
chairman of the Securities & Exchange Commission, in mid-1993, he found a ...